A record €19.2 billion was invested (€22.1 billion including Israel) in 2017. The full European Venture Capital Report is now available for free below as PDF presentation:
A record €19.2 billion was invested (€22.1 billion including Israel) in 2017. The full European Venture Capital Report is now available for free below as PDF presentation:
Click image to enlarge. Open the PDF for a higher-resolution.
The advent of big tech and mega-rounds
UK investment nearly doubled from $4.2 to $7.8 billion in 2017. Mega-rounds were a major growth driver. For instance, 2017 saw 22 rounds over $50 million, compared with nine in 2016. However mega-rounds were not the only factor: even when excluding the top-10 rounds in each year, investment increased from $3.2 to a new record of $5.1 billion. Note that the decline in number of rounds will likely reverse, once all smaller 2017 rounds have been announced.
Is UK investment overheating?
One way to answer this question is by comparing investment per capita. U.S. investment in 2017 was $250 per capita (320 million people, ~$80 billion(1) investment). UK investment in 2017 was $120 per capita (65 million people, ~$7.8 billion investment). The chart below gives a pan-European view:
The above chart indicates that European VC investment still has plenty of upside. European tech is growing up. And the UK acts as a crucial tech hub to Europe’s 700 million people. UK investment now accounts for 37% of all venture capital investment in Europe. Indeed, the vast majority of funded UK companies are active across Europe.
More capital is available than ever before
Europe’s venture capital industry has been on the rise with more capital available than ever. At the same time, UK investment from the USA and Asia more than doubled in 2017. Corporate investment into the UK also more than doubled. Investment from domestic UK funds also grew, but less so (more on that below).
What about any impact from Brexit?
A year ago when VC activity in the UK did decline, we stated that Brexit was not driving that decline. We’re opposed to the idea of Brexit, but high-growth tech companies are among the least vulnerable constituents, at least in the short term. Manufacturing, hospitals, and finance employment are more vulnerable. The long-term ramifications on tech have yet to play out (macro impact on consumer demand, ability to attract foreign talent). Luckily for the UK, big tech players like Facebook, Amazon, Softbank and Google all placed firm votes of confidence on the UK in 2017.
Are there any warning signs in UK market conditions?
Secondly, the UK is no longer the undisputed capital of European venture capital. Continental Europe’s venture capital industry is catching up to the UK. The following heatmap shows how France is nearly on par with the UK while other countries are also on the rise, for example:
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1. $80 billion investment in the U.S. as per average of Pitchbook and CB Insights
The heatmap above (click to enlarge) shows the most active venture capital investors in 2017, by number of European rounds. Again, Bpifrance leads again by a wide margin. The heatmap (click to enlarge) also shows the main investment themes of the most active investors.
What about Europe’s most prominent venture capital investors? What are their preferred investment themes? The below heatmap shows where the investment elite is investing its capital: Fintech, SaaS, Deep Tech, Health Tech received the most allocation, which is in line with broader market (click to enlarge):
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Startup Lithuania launched a new startup database, powered by Dealroom. What does “powered by Dealroom” mean, exactly?
In short: easy deployment of an end-to-end solution, without disruption to the existing website. The result?
To learn more, contact us. Below are selected examples of existing maps & databases.
StartupAmsterdam (live since 2015, launching customer)
European Commission’s StartupEurope (live since 2015)
StartupDelta Netherlands (live since 2015)
StartupBahrain (live since 2017)
Techstars (live since 2016)
RomaStartup (live soon!)
Vilnius Tech Map by GoVilnius (live since 2017)
StartupLithuania (live since 2018)
Google Campus Warsaw (live since 2016)
iAmsterdam (live since 2015, iFrame)
StartupLithuania (live since 2018 iFrame)
Insight #1: A record €19.4 billion in venture capital was invested into European companies in 2017
Investors continued betting on European tech at a record pace. Preliminary Dealroom data shows that €19.4 billion in Venture Capital was invested into European companies in 2017, a staggering 36% increase from €14.3 billion in 2016.
Including Israel the combined figure was €22.3 billion in 2017, a 31% increase from €17.0 billion in 2016. As a result, European tech companies have more capital at their disposal than ever before, available to grow their workforce, invest in technology, in marketing and make acquisitions.
The number of rounds declined, from 3,900 in 2016 to 3,377 in 2017, a decline of 13%. A caveat is needed here however, because many 2017 rounds will appear with a 12-24 month delay (especially smaller rounds, which often appear only once a follow-on round has been announced).
Pro tip: click below and customise the chart by adding/removing keywords (e.g. Germany as location or Series A rounds). Talk to us on Intercom (bottom-right) for help.
Insight #2: Bigger and more mega-rounds than ever; but even excluding those mega-rounds 2017 was still a record by far
There were 19 rounds above €100 million in 2017, compared with 10 in 2016 (90% increase). The rise of mega-rounds was driven by corporate investment activity, involvement of big global funds like SoftBank, and an overarching trend towards big tech (i.e. market consolidation).
Importantly to note however, that even excluding the top 3 or even top 10 rounds in each year, 2017 was a record by far, as the below interactive chart shows:
Insight #3: UK tech companies defied Brexit and doubled the amount of capital raised in 2017 to €7.5 billion; that’s 38% of all venture capital invested in Europe
UK companies received €7.5 billion in venture capital in 2017, a 103% increase from €3.7 billion in 2016. That’s 38% of Europe’s total! The number of VC rounds declined by 7%, from 811 in 2016 to 757 in 2017. However, this 7% decline will likely turn into an increase, once all smaller rounds have been announced.
What about Brexit’s impact? As Dealroom stated a year ago (when VC activity in the UK did decline), Brexit unlikely impacted those numbers. We’re opposed to the idea of Brexit, but high-growth tech companies are among the least vulnerable constituents, at least in the short term. Manufacturing, hospitals, and finance employment are more vulnerable. The long-term ramifications on tech have yet to play out (macro impact on consumer demand, ability to attract foreign talent). Luckily for the UK, big tech like Facebook, Amazon and Google all placed firm votes of confidence on the UK in 2017.
That said, there are two worrying signs in the UK: the decline of seed investment and of fundraising by VC firms. More on both further below.
Insight #4: By number of rounds, France and the UK are going head-to-head
Companies in the UK raised almost 3x more capital than Germany (2nd) and France (3rd). The below heatmap provides a real-time view of venture capital investment by country. Click on change view to switch to number of rounds and/or show quarterly data.
By number of rounds the trend is not skewed by mega rounds; France and the UK are going head-to-head, as the below heatmap shows. Moreover, if crowdfunding rounds are excluded, the 2017 number of VC rounds in France (679 rounds) is higher than the UK (629 rounds).
You can also switch view to cities, industries, business models and topics. Europe’s leading tech hubs of 2017 are: London, Paris, Stockholm, Berlin, Barcelona and Amsterdam.
Insight #5: Investment from Asia tripled in 2017; investment activity from the USA doubled (after a dip in 2016)
After a dip in 2016, investment into Europe from the USA is back at record levels. In 2017 there were 444 rounds with USA investors. The total amount doubled from €4.1 billion to €8.1 billion (total value of rounds with at least one USA investor).
And it’s not just the UK, increasingly USA investors place large bets in continental Europe. Examples include: Roivant, ADC Therapeutics, Letgo, Soundcloud, Tricentis, Snow, Cabify and others.
Investment coming from Asia is rapidly catching up however, with 138 rounds in 2017, up 68% from 82 in 2016. The amount of capital invested tripled from €1.3 billion to €4.1 billion.
The number of rounds without any participation from European investors declined in 2017. That’s a positive sign, but European investors did completely miss some landmark deals like Roivant and Improbable.
Insight # 6: Corporate investing grew to €6.2 billion, equal to 32% of European VC
Corporate investing has been on the rise for a while and this trend continued into 2017. Corporate investors include Naspers (Delivery Hero, Kreditech, Letgo, SimilarWeb), JD.com (Farfetch), SAP’s Sapphire Ventures (TransferWise), and many financial institutions (BBVA, Barclays, BNP Paribas).
Insight # 7: The so-called implosion of early stage investing is greatly exaggerated, at least in Europe; exception is UK
Reports emerged elsewhere about a worldwide decline or even implosion of seed stage investing. The following chart shows rounds €100K to €1 million (which you can adjust according to your own preference using “advanced” search) indicating no such trend in Europe . Even the modest decline shown in 2017 will likely disappear because, as mentioned above, many seed rounds are announced with a 18-24 months delay (after the first follow-on round).
A notable exception is the UK where early stage investing peaked in 2014:
Is the notion of an early stage crunch completely baseless then? There is sense of more healthy restraint in early-stage investing. As ecosystems mature, experience causes reality to set in.
Insight #8: VC industry in continental Europe is catching up to the UK
Halfway 2017 Dealroom reported that French VC firms overtook VC firms in the UK by amount of new funds raised, for the first time ever. For the full year 2017, UK and France are going head to head, as shown in the below new funds heatmap. Of course, this is based on only one year of data. Additionally, the UK remains the go-to destination for USA investors with a European branch.
For founders across Europe, funding options have vastly improved. Dealroom analysis has shown that for early stage funding (below €10 million) domestic funding is on the rise, while for larger rounds cross-border funding is on the rise (above €10 million). This seems like a very healthy development.
Insight #9: Investors doubled down on Healthtech and Fintech, which attracted the most venture capital in Europe in 2017, as in 2016
Fintech companies in Europe raised €3.9 billion, more than doubling from €1.8 billion in 2016. The number of fintech rounds was stable at around 519. Healthtech raised €3.7 billion, up 68% from €2.2 billion in 2016. The number of healthtech rounds was down from 606 to 467. The following heatmap shows the exact breakdown within Europe. Use the buttons highlighted in red to switch views.
Deep tech (which includes artificial intelligence, robotics, semiconductors) continues to be an important theme for European tech. Albeit a subjective term hard to define precisely, it is useful to track deep tech investment activity. Also see Dealroom’s October 2016 report on the Artificial Intelligence & Deep Tech in Europe. Blockchain and bitcoin investment is still relatively small, but growing rapidly. The below heatmap shows funding trends by investment topic:
Insight #10: VC-backed exits disappointed by amount of capital returned, but the number of exits grew significantly
VC-backed exits in 2017 returned about €10 billion in capital; a disappointing figure by any measure. By comparison, in 2016 €34 billion of capital was returned, a healthier number when compared against the €10-15 billion capital typically invested each year.
Should we be alarmed? The full picture is more nuanced. Returned capital tends to be extremely concentrated around a few large exits, and hence it is volatile. The number of VC-backed exits grew from 260 in 2016 to 282 in 2017. Moreover, Europe’s near-term exit pipeline is looking very promising (Spotify, Adyen, Transferwise, Deliveroo, Klarna, and many others).
Beyond that, venture capital have become firmly focused on potential mega-outcomes areas such as consumer banking, healthcare, and mobility. VC-backed exits deserve a more thorough review, which we will provide soon.
Notes on methodology:
More and more publications are recognising Dealroom as the industry standard for data, insights and identifying new trends in European tech: The Financial Times, The Economist, The New York Times, Les Echos, Reuters and many others have featured Dealroom data in 2017. Below is an overview of selected articles:
The Washington Post on VC funding in UK and France
The New York Times on French tech and the launch of Station F
The Economist on the stunning rise of French Tech
Bloomberg on Station F: Francois Hollande Now Works Part-Time in a Mega Campus for Startups
Politico on UK VC funds being overtaken by European venture capital funds, post Brexit
Business Insider on Europe’s most prominent European VC investors
The Financial Times on the need for European scale up capital
The Financial Times on VC funding in France
The Financial Times on VC funding post Brexit
The Financial Times on European Unicorns
TechCrunch on Atomico’s State of European Tech 2016
Reuters on Eastern European tech
VentureBeat on now being the best time ever to be an entrepreneur in Europe
The Independent on Eastern European Tech
Wired UK on the UK’s top investments
Wired UK on Europe leading the way in AI
Wired UK on Investments in London despite Brexit
Wired UK on State of European Tech report
Evening Standard on France overtaking UK in fundraising by Venture Capital funds
Les Echos on Europe as the gravitational center of Deep Tech
Les Echos on why French tech is opening its borders
Les Echos on France overtaking UK in fundraising by Venture Capital funds
La Tribune on France overtaking UK in fundraising by Venture Capital funds
Business Insider Italia on Italian VC Funding
Il Sole 24 Ore with multiple posts featuring Dealroom
Il Corriere De La Sera on startups in Italy
Il Corriere De La Sera on challenges of Italian Venture Capital
La Vanguardia on Europen Startups fund raising
La Vanguardia on Madrid versus Barcelona as startup capitals
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Over the past weeks we’ve implemented a major upgrade to the popular heatmaps. Here’s a quick overview of what’s new:
Feature #1: you can now change view to yearly vs. quarterly and by amount vs. by number of rounds. Also, you can now export data
Feature #2: you can now view heatmaps within selected markets. For example, here are top industries in the UK:
Feature #3: you can now view new VC funds by country. As you can see below, UK and France are going head-to-head by amount of new funds raised by VCs:
We hope you enjoy! For any questions please contact us via Intercom in the bottom right of your screen.
Amsterdam has rapidly become a top-tier tech hub in Europe. The city is home to Dutch companies such as Adyen, Takeaway.com, Booking.com and MessageBird. Several major global tech companies have made Amsterdam their European hub, such as Uber, Netflix and Tesla. But how many people work in Amsterdam’s tech community? What is the overall impact on the Amsterdam job market? A new report, prepared by Dealroom.co and commissioned by StartupAmsterdam answers these questions.
The report is free to download here
Scope & methodology
Founded in 2013 in Amsterdam, Dealroom helps corporations, investment firms and governments to track innovative companies and identify strategic opportunities, through data-driven software which is accessible via dealroom.co. World-class corporates, venture capital & private equity firms, consultants and banks use Dealroom’s software, database and bespoke research to identify & track growth opportunities and stay at the forefront of innovation.
Amsterdam Startupmap: https://startupmap.iamsterdam.com/map